EXHIBIT 10.3
NONCOMPETITION, NONDISCLOSURE AND NONSOLICITATION AGREEMENT
THIS NONCOMPETITION, NONDISCLOSURE AND NONSOLICITATION AGREEMENT
("Agreement"), dated as of September 8, 2004, is by and among each and all of
the stockholders of ▇▇▇▇▇▇▇▇ WORLDWIDE, INC., a California corporation
("▇▇▇▇▇▇▇▇"), shown on the signature pages to this Agreement, and also including
individually ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇ ("Stockholder(s)"), and ▇▇▇▇▇▇
INTERACTIVE INC., a Delaware corporation ("▇▇▇▇▇▇").
WHEREAS, Stockholders beneficially own all of the issued and outstanding
shares of ▇▇▇▇▇▇▇▇ common stock, par value $1.00 (the "▇▇▇▇▇▇▇▇ Shares");
WHEREAS, concurrently with the execution and delivery of this Agreement,
▇▇▇▇▇▇ will acquire all of the ▇▇▇▇▇▇▇▇ Shares from Stockholders, pursuant to
the terms of that certain Agreement and Plan of Merger, dated as of the date
hereof, by and among ▇▇▇▇▇▇, Capitol Merger Sub, LLC, a Delaware limited
liability company of which ▇▇▇▇▇▇ is the sole member, ▇▇▇▇▇▇▇▇, and Stockholders
(the "Merger Agreement"); and
WHEREAS, the execution and delivery of this Agreement concurrently with
the Merger Agreement is required by Sections 3.3.1(h) and 3.3.2(f) of the Merger
Agreement.
NOW, THEREFORE, in consideration of the premises and the representations,
warranties, covenants and agreements herein contained, and intending to be
legally bound hereby, ▇▇▇▇▇▇ and Stockholders hereby agree as follows:
SECTION 1. - DEFINITIONS
1.1 The following terms shall have the following meanings when used in
this Agreement. Capitalized terms not expressly defined in this Agreement shall
have the meanings ascribed to them in the Merger Agreement.
(a) "Acquired Business" means the business and affairs of the
Acquired Companies as conducted prior to the Closing.
(a) "Acquired Companies" means ▇▇▇▇▇▇▇▇ and its Subsidiaries,
collectively.
(a) "Agreement" has the meaning given to it in the first paragraph
of this Agreement.
(a) "Business Day" has the meaning given to it in the Merger
Agreement.
1
(a) "Closing" has the meaning given to it in the Merger Agreement.
(a) "Confidential Information" is defined in Section 2.1.
(a) "▇▇▇▇▇▇" has the meaning given to it in the first paragraph of
this Agreement.
(a) "▇▇▇▇▇▇ Business" means the business and affairs of the ▇▇▇▇▇▇
Entities as conducted prior to the Closing.
(a) "▇▇▇▇▇▇ Employee" means an employee of a ▇▇▇▇▇▇ Entity
including without limitation any person employed by a ▇▇▇▇▇▇ Entity on the date
of this Agreement or at any time thereafter during the term of this Agreement.
(a) "▇▇▇▇▇▇ Entities" means ▇▇▇▇▇▇ and its Subsidiaries (including
the Surviving Entity), collectively
(a) "Merger Agreement" has the meaning given to it in the second
whereas clause of this Agreement.
(a) "Noncompetition Payment" has the meaning given to it in
Section 5.
(a) "Party" means ▇▇▇▇▇▇ or any of Stockholders and "Parties"
means ▇▇▇▇▇▇ and Stockholders.
(a) "Person(s)" has the meaning given to it in the Merger
Agreement.
(a) "Stockholder(s)" has the meaning given to it in the first
paragraph of this Agreement.
(a) "Subsidiaries" has the meaning given to it in the Merger
Agreement.
(a) "▇▇▇▇▇▇▇▇" has the meaning given to it in the first paragraph
of this Agreement.
(a) "▇▇▇▇▇▇▇▇ Shares" has the meaning given to it in the first
whereas clause of this Agreement.
SECTION 2. - ACKNOWLEDGMENTS BY SELLER AND STOCKHOLDERS
2.1 Each Stockholder acknowledges that such Stockholder has occupied a
position of trust and confidence with the Acquired Companies prior to the date
hereof and has had access to, and has become familiar with, some of the
following information relating to the Acquired Business, whether or not such
information is embodied in writing or other physical form or is retained in the
memory of any Stockholder (collectively the "Confidential Information"):
2
(a) any and all information and material proprietary to the
Acquired Companies, not generally known or available to the public, or that is a
trade secret within the meaning of applicable law, in each case in which any of
the Acquired Companies has any interest or rights now or in the future,
including without limitation the Acquired Companies' business strategies, client
lists, supplier lists, partners, agreement terms, pricing, databases, products,
designs, processes, systems, methods, concepts, trade secrets, know-how, data,
technical plans, drawings, information, computer software and programs
(including object code and source code), applications, inventions, formulas,
technology, plans, research and development, and anything else that might be
construed as proprietary or confidential in nature;
(b) all historical financial statements, financial projections and
budgets, historical and projected sales, capital spending budgets and plans, the
names and backgrounds of key personnel, contractors, agents, suppliers and
potential suppliers, personnel training and techniques and materials, and
purchasing methods and techniques; and
(c) all notes, analysis, compilations, studies, summaries and
other material prepared by or for the Acquired Companies containing or based, in
whole or in part, upon any information included in the foregoing; and
Notwithstanding the terms of subsections (a) through (c) above,
Confidential Information shall not include information and material (a) publicly
available through no breach by any Stockholder of any confidentiality obligation
to the Acquired Companies, (b) released by any Stockholder with a written waiver
of confidentiality, (c) lawfully obtained from third parties, or (d) previously
known or developed by third parties independently of the Acquired Companies and
any Stockholder provided that such knowledge or development can be independently
substantiated.
2.2 Each Stockholder acknowledges that:
(a) the Acquired Business is international in scope;
(b) the products and services related to the Acquired Business are
marketed throughout the world;
(c) the Acquired Business competes with other businesses that are,
or could be, located in any part of the world;
(d) ▇▇▇▇▇▇ has required that each Stockholder make the covenants
set forth in Sections 3 and 4 as a condition to ▇▇▇▇▇▇' purchase of the ▇▇▇▇▇▇▇▇
Shares and payment of the Noncompetition Payment;
(e) the provisions of Sections 3 and 4 are reasonable and
necessary to protect and preserve ▇▇▇▇▇▇' operation of the Acquired Business
from and after the Closing; and
3
(f) ▇▇▇▇▇▇ would be irreparably damaged if any Stockholder were to
breach any of the covenants set forth in Sections 3 and 4.
SECTION 3. - CONFIDENTIAL INFORMATION
3.1 Each Stockholder acknowledges and agrees that the protection of the
Confidential Information is necessary to protect and preserve the value of the
Acquired Business. Therefore, each Stockholder hereby agrees not to disclose any
Confidential Information to any Persons or use any Confidential Information for
his or its own account or for the benefit of any third party, unless, and
limited to extent that, (a) the Confidential Information is or becomes generally
known to, and available for use by, the public (other than as a result of any of
the Acquired Companies' or any Stockholder's fault or the fault of any other
Person bound by a duty of confidentiality to ▇▇▇▇▇▇ or any of the Acquired
Companies) or (b) ▇▇▇▇▇▇ consents in writing to such disclosure or use.
3.2 Each of the Stockholders shall deliver to ▇▇▇▇▇▇, at any time that
▇▇▇▇▇▇ may request, all documents, memoranda, notes, plans, records, reports and
other documentation, models, components, devices or computer software, whether
embodied in a disk or in other form (and all copies of all of the foregoing),
that contain Confidential Information and any other Confidential Information
that such Stockholder may then possess or have under his (or its) control.
SECTION 4. - NONCOMPETITION AND NONSOLICITATION
4.1 As an inducement for ▇▇▇▇▇▇ to enter into this Agreement and to pay
the Noncompetition Payment, Stockholder agrees that for a period of two (2)
years after the Closing no Stockholder will knowingly (including without
limitation after notification by ▇▇▇▇▇▇), directly or indirectly, engage or
invest in, own, manage, operate, finance, control or participate in the
ownership, management, operation, financing or control of, be employed by, serve
as a director of, or be a consultant or independent contractor for, or render
services or advice to, or guarantee any obligation of, any Person engaged in or
with the assistance of Stockholder directly planning to become engaged in any
industry or any other business whose products or activities compete anywhere in
the world in whole or in part with the Acquired Business or the ▇▇▇▇▇▇ Business;
provided, however, that any Stockholder may purchase or otherwise acquire up to
(but not more than) one percent of any class of securities of any enterprise
(but without otherwise participating in the activities of such enterprise) if
such securities are listed on any national or regional securities exchange or
have been registered under Section 12(g) of the Securities Exchange Act of 1934.
Each Stockholder agrees that this covenant is reasonable with respect to its
duration, geographical area and scope.
4.2 As a further inducement for ▇▇▇▇▇▇ to enter into this Agreement and
to pay the Noncompetition Payment, Stockholder agrees that for a period of two
(2) years after the Closing, each Stockholder agrees not to, directly or
indirectly:
(a) induce or attempt to so induce any ▇▇▇▇▇▇ Employee to leave the
employ of a ▇▇▇▇▇▇ Entity;
4
(b) in any way interfere with the employment relationship between
a ▇▇▇▇▇▇ Entity and any ▇▇▇▇▇▇ Employee;
(c) hire, offer employment to, employ or otherwise engage as an
employee, independent contractor or otherwise any ▇▇▇▇▇▇ Employee, unless the
applicable ▇▇▇▇▇▇ entity gives its written consent to such offer, employment or
relationship, or unless at least six months have passed since such person's
employment relationship with ▇▇▇▇▇▇ was terminated; or
(d) induce or attempt to induce any customer, supplier, licensee
or other Person to cease doing business with a ▇▇▇▇▇▇ Entity or in any way
materially interfere with the relationship between any such customer, supplier,
licensee or other business entity and a ▇▇▇▇▇▇ Entity.
4.3 Each Stockholder agrees that he (or it) will not, directly or
indirectly, solicit the business of any Person known to such Stockholder to be a
customer of the ▇▇▇▇▇▇ Entities, whether or not such Stockholder had personal
contact with such Person, with respect to products or activities which compete
in whole or in part with the ▇▇▇▇▇▇ Business or the Acquired Business.
SECTION 5. - COMPENSATION
5.1 As additional consideration for the covenants in Section 4 of this
Agreement, ▇▇▇▇▇▇ will pay Stockholders an aggregate of five hundred thousand
dollars ($500,000) (the "Noncompetition Payment") via wire transfer at the
Closing as directed by the Stockholders in writing delivered to ▇▇▇▇▇▇.
SECTION 6. - INJUNCTIVE RELIEF
6.1 In addition to ▇▇▇▇▇▇' right to damages and any other rights it may
have at law, ▇▇▇▇▇▇ shall be entitled to obtain injunctive and/or other
equitable relief to restrain any breach or threatened breach or otherwise to
specifically enforce the provisions of Sections 3 and 4, it being agreed by each
of Stockholders that money damages alone would be inadequate to compensate
▇▇▇▇▇▇ and would be an inadequate remedy for such breach.
SECTION 7. - NOTICES
7.1 Notices. All notices, consents, waivers, and other communications
required or permitted by this Agreement shall be in writing and shall be deemed
given when (a) delivered to the appropriate address by hand or by nationally
recognized overnight courier service (costs prepaid); or (b) received or
rejected by the addressee, if sent by certified mail, return receipt requested.
In the case of notices to Stockholders, in each case such notice shall be to the
address and marked to the attention of the person (by name or title) designated
in ▇▇▇▇▇▇▇▇ Corresponding Exhibit 9.4 to the Merger Agreement, and in the case
of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ to the address designated for the ▇▇▇▇▇▇▇▇ Family Trust
in such ▇▇▇▇▇▇▇▇ Corresponding Schedule, and in the case of ▇▇▇▇ ▇▇▇▇▇, to the
address designated for the White Family Living Trust in such ▇▇▇▇▇▇▇▇
5
Corresponding Schedule (or to such other address or person as a Party may
designate by notice to the other Parties). In the case of notices to ▇▇▇▇▇▇,
such notice shall be to the address designated in Section 9.4 of the Merger
Agreement.
SECTION 8. - JURISDICTION; SERVICE OF PROCESS
Any proceeding arising out of or relating to this Agreement may be brought
in the state courts, or Federal courts if they can acquire jurisdiction, sitting
in the State of Delaware, and each of the Parties irrevocably submits to the
exclusive jurisdiction of each such court in any such proceeding, waives any
objection it may now or hereafter have to venue or to convenience of forum,
agrees that all claims in respect of the proceeding shall be heard and
determined only in any such court, and agrees not to bring any proceeding
arising out of or relating to this Agreement in any other court. The Parties
agree that any of them may file a copy of this Section 8 with any court as
written evidence of the knowing, voluntary and bargained agreement between the
Parties irrevocably to waive any objections to venue or to convenience of forum.
Process in any proceeding referred to in the first sentence of this Section may
be served on any Party anywhere in the world.
SECTION 9. - WAIVER; REMDIES CUMULATIVE
9.1 Obligations Several. The duties and obligations of the Stockholders
hereunder are several. Each Stockholder shall be solely responsible for any
breach of its own duties and obligations hereunder, and no Stockholder shall be
liable or responsible for any breach by another Stockholder of any duty or
obligation contained herein.
9.2 Cumulative Rights. The rights and remedies of the Parties are
cumulative and not alternative. Neither any failure nor any delay by any Party
in exercising any right, power, or privilege under this Agreement or any of the
documents referred to in this Agreement will operate as a waiver of such right,
power, or privilege, and no single or partial exercise of any such right, power,
or privilege will preclude any other or further exercise of such right, power,
or privilege or the exercise of any other right, power, or privilege. To the
maximum extent permitted by applicable law: (a) no claim or right arising out of
this Agreement or any of the documents referred to in this Agreement can be
discharged by one Party, in whole or in part, by a waiver or renunciation of the
claim or right unless in writing signed by the other Parties; (b) no waiver that
may be given by a Party will be applicable except in the specific instance for
which it is given; and (c) no notice to or demand on one Party will be deemed to
be a waiver of any obligation of that Party or of the right of the Party giving
such notice or demand to take further action without notice or demand as
provided in this Agreement or the documents referred to in this Agreement.
SECTION 10. - ENTIRE AGREEMENT AND MODIFICATION
This Agreement, the Merger Agreement, the ▇▇▇▇▇▇ Closing Documents, the
▇▇▇▇▇▇▇▇ Closing Documents, the Stockholder Closing Documents, and all other
documents delivered pursuant to this Agreement constitute the complete and
exclusive statement of the terms of the agreement between the Parties with
respect to the subject matter hereof and thereof and supersede all prior
agreements, whether written or oral, between the Parties with respect to the
subject matter hereof and thereof. This Agreement may not be amended except by a
written agreement executed by ▇▇▇▇▇▇ and the Stockholders.
6
SECTION 11. - ASSIGNMENTS, SUCCESSORS, AND NO THIRD PARTY RIGHTS.
No Stockholder may assign any of its rights or delegate any of its
obligations under this Agreement without the prior written consent of ▇▇▇▇▇▇.
Subject to the preceding sentence, this Agreement will apply to, be binding in
all respects upon, and inure to the benefit of the successors and permitted
assigns of the Parties. Nothing expressed or referred to in this Agreement will
be construed to give any Person other than the Parties any legal or equitable
right, remedy, or claim under or with respect to this Agreement or any provision
of this Agreement, except such rights as shall inure to a successor or permitted
assignee pursuant to this Section 11. No assignment by operation of law due to a
merger or consolidation, and no change of control, shall be deemed to be an
assignment hereunder.
SECTION 12. - SEVERABILITY.
If any provision of this Agreement is held invalid or unenforceable by any
court of competent jurisdiction, the other provisions of this Agreement will
remain in full force and effect. Any provision of this Agreement held invalid or
unenforceable only in part or degree will remain in full force and effect to the
extent not held invalid or unenforceable.
SECTION 13. - SECTION HEADINGS, CONSTRUCTION
The headings of Sections in this Agreement are provided for convenience
only and will not affect its construction or interpretation. All references to
"Sections" refer to the corresponding Sections of this Agreement. This Agreement
has been prepared by ▇▇▇▇▇▇ and each Stockholder, and each acknowledge that: (a)
they had the opportunity to be represented by legal counsel in the negotiation
and drafting of this Agreement; and (b) that no ambiguity in this Agreement
shall be construed against any Party as draftsperson.
SECTION 14. - GOVERNING LAW
This Agreement will be governed by and construed under the laws of the
State of Delaware without regard to conflicts of laws principles that would
require the application of any other law.
SECTION 15. - EXECUTION OF AGREEMENT
This Agreement may be executed in one or more counterparts, each of which
will be deemed to be an original copy of this Agreement and all of which, when
taken together, will be deemed to constitute one and the same agreement. The
exchange of copies of this Agreement and of signature pages by facsimile
transmission shall constitute effective execution and delivery of this Agreement
as to the Parties and may be used in lieu of the original Agreement for all
purposes. Signatures of the Parties transmitted by facsimile shall be deemed to
be their original signatures for all purposes.
IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be
duly executed on its behalf as of the day and year first above written.
7
[SIGNATURE PAGE FOLLOWS]
8
▇▇▇▇▇▇ INTERACTIVE INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------
Its: Vice Chairman and CEO
---------------------------
Signature Page to Non-competition Agreement dated September 9, 2004
9
This Noncompetition, Nondisclosure and Nonsolicitation Agreement was signed by
the following Stockholders of ▇▇▇▇▇▇▇▇ Worldwide, Inc. (individual signature
pages have been omitted):
▇▇▇▇▇▇▇▇ Family Trust
White Family Living Trust
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇
10